TCF Bank 2009 Annual Report Download - page 84

68 : TCF Financial Corporation and Subsidiaries
The amounts in accumulated other comprehensive loss that are expected to be recognized as components of net periodic
benet cost during 2010 are as follows.
Postretirement
(In thousands) Pension Plan Plan Total
Actuarial net loss $1,564 $313 $1,877
Settlement expense 1,771 – 1,771
Prior service cost 30 – 30
Transition obligation – 4 4
Net loss $3,365 $317 $3,682
TCF’s Pension Plan assets are invested in index mutual
funds that are designed to mirror the performance of the
Standard and Poor’s 500 and the Morgan Stanley Capital
International U.S. Mid-Cap 450 indexes, at targeted
weightings of 75% and 25%, respectively.
The actuarial assumptions used in the Pension Plan
valuation are reviewed annually. The expected long-term
rate of return on plan assets is determined by reference
to historical market returns and future expectations. The
10-year weighted-average return of the indexes consistent
with the Plan’s current investment strategy was 1.5%, net
of administrative expenses, and was signicantly impacted
by the market events of 2008. Although past performance
is no guarantee of the future results, TCF is not aware of any
reasons why it should not be able to achieve the assumed
future average long-term annual returns of 8.5%, net of
administrative expenses, on plan assets over complete
market cycles. A 1% difference in the expected return on
plan assets would result in a $583 thousand change in net
periodic pension expense.
The discount rate used to determine TCF’s pension and
postretirement benet obligations as of December 31,
2009 and December 31, 2008 was determined by matching
estimated benet cash ows to a yield curve derived from
corporate bonds rated AA by Moody’s. Bonds containing
call or put provisions were excluded. The average estimated
duration of TCF’s Pension and Postretirement Plans varied
between seven and eight years.
The actual return (loss) on plan assets, net of administra-
tive expenses was 32.8% for the 12 months ended December
31, 2009 and (50.8)% for the 15 months ended December
31, 2008. The actual gain on plan assets for the 12 months
ended December 31, 2009 decreased the actuarial loss by
$8.4 million. The decrease in the discount rate from 6.25%
at December 31, 2008 to 5.5% at December 31, 2009
increased the actuarial loss by $2.2 million. Various plan
participant census changes increased the actuarial loss by
$250 thousand during the 12 months ended December 31,
2009. The decrease in the interest crediting rate from 5% at
December 31, 2008 to 4.5% at December 31, 2009 reduced
the actuarial loss by $1.5 million for the 12 months ended
December 31, 2009. The accumulated other comprehensive
loss in excess of the 10% of the greater of the accumulated
benet obligation or fair value of the plan assets is
amortized over approximately seven years.
For 2009, TCF is eligible to contribute up to $20 million to
the Pension Plan until the 2009 federal income tax return
extension due date under various IRS funding methods. During
2009, TCF contributed $2.5 million to the Pension Plan. TCF
does not expect to be required to contribute to the Pension
Plan in 2010. TCF expects to contribute $979 thousand to the
Postretirement Plan in 2010. TCF contributed $612 thousand to
the Postretirement Plan for the 12 months ended December 31,
2009. TCF currently has no plans to pre-fund the Postretirement
Plan in 2010.
The following are expected future benet payments used
to determine projected benet obligations.
Pension Postretirement
(In thousands) Plan Plan
2010 $ 4,762 $ 979
2011 4,166 946
2012 4,175 927
2013 3,781 904
2014 4,010 876
2015-2019 16,768 3,844